20’s vs the 40’s: the perils of buying health insurance later in life

Mr. Dev Sharma is a 47-year-old man running his garment business. He is a diabetic patient. He caught a severe urinary tract infection owing to which he had to be hospitalized. Since he did not have medical insurance, he paid everything from his pocket. He realized how important it was to buy health insurance policies. When he started exploring different health plans, he discovered that he had limited choices and premium was also very high.

Avinash is a 25-year-old young man working in an MNC. One morning he broke his hip while jogging. He underwent surgery and stayed in the hospital for a week. While this unexpected accident did take a toll on his physical health, he was financially at peace. He had a health insurance policy which covered all his expenses. He had spent only Rs 2000 for Rs 2 lakh cover, against which he claimed Rs 50,000 for the hospitalization. His treatment was almost free!

When it comes to securing life and health, ‘earlier the better’ is the mantra you should adopt for buying health insurance policies. When you are in the 20s, you are carefree with lesser responsibilities and in the prime of your health. You may not feel the need to buy medical insurance assuming that you are fit and fine. But, you can take lessons from Avinash’s case. Medical emergencies can strike anytime at any age. As you reach the 40s, your family and financial obligations increase, and you are more prone to health risks.

If you are still not convinced why you should not buy health insurance later in life, the following perils will.

Higher Premium

In most health plans, the premium amount is directly proportionate to your current age. In the 20s, you pay a lower premium. In the 40s, you pay almost 50-60% more premium because of the age as well as higher health risks.

Limited Lifetime Coverage

When you buy health insurance policies in early age, you have an option of lifelong renewal and extended coverage. As you get middle-aged and older, you lose this benefit and deprived of expected coverage.

Lesser Choices

When you are a late entrant, you may not get a plan of your choice. This is because insurance companies restrict the number of benefits owing to higher health risks. However, at a young age, you can choose a plan according to your health requirements and avail comprehensive benefits.

Longer Waiting Period

Most medical insurance plans have a clause called ‘waiting period’. As per this clause, the insured person has to wait for about 1 month to 3 months before making a claim. Some pre-existing conditions such as diabetes or genetic conditions have a waiting period of 1-2 years. If you buy the plan in early years, the waiting period will get over sooner and you can claim the benefits easily.

Medical Test Obligation Increases

If you are in the 40s, the insurance company may ask you to go under a medical test. If the test reports indicate an ailment or certain health symptoms, the insurance company may either charge a higher premium or exclude the said ailment from the scope of coverage. If the medical diagnosis indicates a high-risk case, the insurance company may also reject the proposal.

Poor Financial Planning

Since you would be required to pay a higher premium in the 40s, you need to re-plan your finances. However, if you buy in the 20s, you can easily accommodate the premium in your portfolio and plan for a better financial future. Moreover, you can re-invest the tax benefit available under section 80(D) in any long-term financial instrument to reap compounding interest benefits.

No Benefit of No-Claim Bonus

The insurance company gives you a discount on renewal premium if you have not made any claim during the policy term. However, when you invest in a health insurance plan in the middle age, there are high chances that of falling prey to ailments and making claims. You wouldn’t be able to get no-claim bonus advantage.

Given the above drawback, it is advisable not to delay buying medical insurance policies at a later age when poor health starts nagging you. Having said that, it’s never too late to buy now!

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